Australia news live updates: Andrews nominates Jacinta Allen as new Victorian deputy premier; China ambassador interrupted by protester

Qantas is forecasting a loss of up to $550m this year, despite strong demand for domestic and international flights allowing it to reduce its net debt to $4bn by the end of this financial year.

That’s a $1.5bn improvement in the past six months.

In a market update on Friday, the airline forecast it would make a significant loss this year of between $450m and $550m, with Qantas group predicting it would return to underlying profit in the next financial year.

It also announced that it will give 19,000 EBA-covered employees a $5,000 payment to share the benefits of its recovery. The payments will be made once the new enterprise bargaining agreements covering them are finalised. Qantas will spend about $87m on these $5,000 staff payments.

Qantas will also further cut its domestic flying schedule in response to rising fuel prices. For July and August, it will cut a further 5% of capacity on top of the 10% it already announced. The 15% reduction in capacity will last through September, with capacity cut by 10% from October to March. The airline will contact customers booked on flights that are cut.

While Qantas has not announced any reductions in its international capacity today, it said the group will be flying at 83% of pre-Covid levels by the fiscal quarter beginning in July – down from 90% in the current quarter.

Ahead of the July holidays, Qantas has also sought to thank customers “for their patience and understanding” during what has been “a challenging restart for the industry globally”. Qantas has been heavily criticised for delayed baggage and poor on-time performance this year, with the Transport Workers Union claiming the airline’s decision to outsource baggage handling staff is contributing to the issues.

Qantas said there will be a 15% increase in ground handling staff during the July holiday compared with staffing levels during the Easter holidays.

Qantas group chief executive, Alan Joyce, also announced that budget carrier Jetstar’s chief executive, Gareth Evans, will step down from his role in December.